The Meaning of a Credit Card Legal Notice
A credit card legal notice is a formal communication from an issuer of credit cards, including private companies and those connected to regular banks or large banking groups. Most of these notices are contained within your regular credit card bill (see the sample legal notice from Capital One and the typical cardholder agreement sample from Capital One.) In addition to being printed in the bill, the notices often refer to any pertinent information or direct you to their web site.
The purpose of a credit card legal notice is to advise you of your rights and obligations under the terms of your card, including when the card may be cancelled. In the event there was any unusual activity on your account , which you were responsible for but which you did not report in time, it is also important to have evidence actual of the terms of your agreement regarding the unauthorized use of your card based upon the cardholder agreement and its terms.
Since it is important for cardholders to understand the terms of these notices, it is essential to read them as you would any other formal notice. In particular, you should pay attention to any changes made to the terms of your agreement, such as interest rates that are higher than previous rates or higher than what is advertised at the time you (and probably other cardholders) first got the card.
Common Types of Credit Card Legal Notices
Credit card accounts typically generate five common types of legal notices when there is a problem with the account:
- (1) Payment reminders: A reminder message is sent to cardholders who have not made payments, are overdue in making payments, or have accrued a specified dollar amount in overdue payments.
- (2) Default notices: These notices are sent when a cardholder is more than 60 days overdue in making payments or has accumulated an overdue balance that exceeds a specified dollar amount.
- (3) Change-in-terms notices: These notices are sent if the issuer decides to adjust the interest rate, fees, or other account terms, and to provide additional information on the reasons for the change.
- (4) Suspension notices: These notices are sent if the issuer suspends access to the account for 30 days or longer.
- (5) Judgment and garnishment notices: These notices are sent to advise cardholders only when an account has been material in a judgment and an order of garnishment has been obtained.
Consequences for Ignoring a Legal Notice
The consequences of ignoring a legal notice can be significant. The first step after receiving a notice is to determine if it is a scam or legitimate. The most common ways that scammers will use legal notices is to try to get you to call a mobile number or email them back. If you do not have an outstanding debt with a bank, the notice is most likely a scam and should be ignored.
A legitimate legal notice is just that; it is a notice that you are being sued by a bank. If you ignore the notice completely, this will lead to an automatic win for the bank when they ask the Judge to enter a Judgment by default. This means judgement entered against you without you ever contesting it. A creditor will likely obtain a judgment against you, attach your bank account, restrict any assets that you have and garnish your future wages. All of this can happen without you ever knowing it has happened because you ignored the legal notice.
Once a judgment is entered against a debtor, it can’t be just withdrawn or vacated. Because once judgment is entered the court considers you to be guilty and the bank gets the money awarded by the court. The only way to remove a judgment from a credit report is to settle it or pay it in full. If the Judgment is paid off in a lump sum, the creditor will file an "Agreed Judgment the claim has been satisfied," to the court and that info will be sent to the credit bureaus. If the agreed judgment does not show up in a timely manner (6-10 weeks) or the balance is not satisfied, a copy of the satisfaction (that you received from the court) can be sent to the credit bureau(s) and they will delete the judgment from your credit report.
If the creditor has taken a judgment against you, then you owe a minimum of 9% interest on that judgment until you pay it in full. You cannot stop paying by using the following strategies. The creditor can either: 1) Stay garnishment (stop it) or 2) Continue garnishment at whatever percentage or dollar amount is currently taken out each pay period. If you believe the monthly garnishment is too much, ask the judge to reduce it. But, remember you cannot stop paying. There are many other consequences of ignoring a legal notice of you are unaware. Check to see who sent the notice. If a lawyer or legal professional sent the notice, contact him or her immediately. The very worst thing you could possibly do is to ignore the notice completely.
Responding to a Credit Card Legal Notice
Upon receiving a credit card legal notice, there are several steps that the credit card holder should take. First and foremost, one must review the notice carefully to understand the full extent of the claims being made. If possible, one should reach out to the credit card issuer to clarify the nature of the notice and to discuss potential options for resolving the matter. In many instances, a simple conversation can lead to the issuance of a new credit card or an adjustment of the account information. If it does not become clear what claims are being made, one has several options for further investigation. A credit card holder may wish to directly request copies of any pertinent account information , such as statements or related correspondence. These requests for information can be made to the issuer, the attorney who sent the notice, or both. However, if the card holder is legitimately confused by the contents of the legal notice, one should seek help from an attorney. Once having clarified whether the issue involves the Cardholder’s account with the credit card issuer, or with a separate company, one will have a better idea of how to respond. If there is legitimate confusion, one should seriously consider speaking with a lawyer regarding one’s available options.
What Rights do Credit Card Holders Have?
When a credit card company sends a legal notice, you are not entirely without rights. In fact, the law offers you several ways to dispute any errors that might have been made on your credit card account. If you do not agree with the claim, you have up to 30 days to dispute it or send a written explanation of why you believe the complaint is groundless. The credit card issuer must investigate the claim and respond to your dissatisfaction within 30 days. If they find no error exists, the information contained in the billing statement can remain on your credit report. However, if the error occurred on their part, they must correct the mistake. It is important to know that you have some basic consumer legal protections anytime you make purchases on a credit card. When you present a credit card and it is approved, that equals a written contract between you and the merchant. Anytime you return an item, the merchant must follow the policies regarding refunds and returns as stated on the reverse side of the sales slip. If the merchant fails to follow its own policy or state that a policy exists, then you have recourse through the courts.
Avoiding Legal Notices: Best Practices
To avoid the inconvenience and expense of legal notices, credit card users should make every effort to manage their credit responsibly. Some important practical advice to follow includes: Making timely payments, keeping the amount charged on a credit card consistent with one’s income, and regularly monitoring consumption levels are sensible, widely accepted tips for prudent credit management . Acts that may seem trivial can, without realizing it, lead to excessive charges accumulating on a credit card balance, which can have negative financial consequences.
